On Thursday, Morgan Stanley Benjamin Swinburne raised his price target on Netflix shares to $185, based partly on his belief that Netflix is making smart choices about programming rights, which could yield strong results internationally. His price target implies a 16% premium to today’s level.

Swinburne is encouraged by Netflix’s decision to self-produce more content, since the company owns the global rights to such programming. Morgan Stanley has found that Netflix achieves greater subscriber penetration in markets where it makes more titles available.

“As Netflix shifts to more globally owned originals or global licenses, the title count will grow, which history tells us should help ramp penetration,” he wrote in a note to clients. Still, the company will have to make sure that new titles remain high quality.

A look at the revenue that traditional media companies are able to generate based on the value of their net content assets suggests there’s room for Netflix to improve. Netflix brings in a dollar of revenue per dollar of net content assets, Swinburne says, while legacy companies are able to bring in twice that -- or more. (Net content assets is a measurement of the value of Netflix’s content as determined by accountants.)

He notes that Netflix may have trouble reaching that ratio, given that traditional media giants rely heavily on the most profitable regions and are able to sell ads. “Nevertheless, the implications would suggest a dramatic opportunity to drive earnings,” Swinburne writes.

Big Picture: Netflix is making smart programming choices that could pay off internationally, an analyst argues.